While investors fear the potential impacts of tariffs and a slowing economy, some companies are better positioned than others. There’s some fear in the retail space, from the one-two punch of rising unemployment and higher-priced goods due to tariffs.
While that may impact retailers and consumers, chances are the companies with the best industry pricing will feel the pinch the least. They’re the companies that could hold up relatively well amid the current market fears.
Retailer Costco (COST) has recently taking a hit, as earnings narrowly missed expectations. But Costco’s business model, involving the sale of a membership and a low markup on its products, ensures that they can make money even in a slowing economy.
Even with shares selling off after earnings, Costco is up 49% over the past year, and revenues are up by 9%. Costco has been raising membership prices, bringing in higher revenues, and their balance sheet has more cash on it than debt right now.
Action to take: Investors may want to start a position here, and use any further market weakness to add to it. Costco’s unique business model in retail should allow it to continue performing well over a long timeframe.
Plus, is a dividend payer with a 0.2% payout, and the company periodically makes special dividends to shareholders.
For traders, shares are likely to recover some of their earnings selloff. The June $1,060 calls, last trading for about $18.85, could see a double-digit move higher in the coming weeks for a quick rebound trade.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.